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TMI Blog1996 (4) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... d constructed a multi-storeyed building on Plot No. 21, Yusuf Sarai Community center, New Delhi. Flats Nos. 302, 303 and 305 on the third floor of the said building were allotted to the respondent-Trigon Investment and Trading Private Limited - under a letter of allotment dated February 29, 1984 (Annexure R-1) subject to the terms and conditions mentioned therein. The respondent accepted the allotment and paid a sum of ₹ 2,35,000 by way of earnest money to Saket Properties. On February 23, 1986 says the respondent, possession of the said flats was handed over to and accepted by them (Annexure R-2). Neither the Saket Properties nor the respondent intimated the Corporation of the said allotment or delivery of possession. This is an admitted fact. It is also the admitted case of the parties that so far no sale deed(s) has been executed and/or registered in respect of the said flats - as appears to be the general position and practice obtaining in Delhi. 4. On July 11, 1990, the Deputy Assistant Assessor and Collector, M.C.D. issued a call letter for hearing of the objection under Section 126 of the Municipal Corporation Act, 1957 to the respondent requesting him to atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Photo-state) of the rent receipt for the month of May, 1989 is enclosed. 6. The letter requested that the assessment order may be rectified in the light of the above facts. It must be mentioned that no other objection, legal or factual, was raised in the said letter apart from the two objections mentioned above. 7. Probably finding that no action was being taken on its rectification application, the respondent filed an appeal before the learned District Judge, Delhi against the order of assessment dated August 30, 1990. In the Memorandum of Appeal, the respondent stated that possession of the flats had been handed over to it on February 23, 1987 pursuant to the agreement of sale but that no sale deed has been executed till then. It referred to the letting out of the said flats and then stated that the Corporation has not served any notice on it under Section 126 of the Act which is a pre-condition to a valid assessment. It was also submitted that the Corporation is barred from making any assessment for any period prior to April 1, 1988 as no notice was served on it (appellant before the learned Additional District Judge) till that date. It submitted that the rental value ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se favour the agreement for transfer has been executed by the builder did not get their names mutated in the records of the Corporation and that call letter was issued to the respondent, who is one of the transferees from the builder, in the year 1990 only. The call letter is not a notice contemplated by Section 126 of the Act. The order then notices the submission of the learned Counsel for the Corporation in the following words : The Ld. Counsel for the petitioner has vehemently argued that even if no mutation had taken place in law, even then the person who had entered into an agreement with the builder for purchase of the particular flat becomes liable to pay tax in view of Section 126 of the Municipal Corporation Act and as a matter of fact such person steps into the shoes of the Original owner and the Notice served under Section 126 on the Builder be deemed a good notice served on the transferee from the Builder . The High Court opined that the said submission is unacceptable. It observed that under Section 120, the property tax is primarily the liability of the lessor and then posed the question However, the question arises whether the persons who are liable to pay p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lats. The Corporation had in due course given notices to the builder in the year 1985 who failed to respond to the same. The liability to pay taxes got fastened to the premises in accordance with law and that liability is not erased by the failure of the builder to respondent to the notices. When the Corporation came to know that the respondent has purchased the said flats, it issued notices, call letters , to it in the year 1990 and made the assessment order dated August 30, 1990. The learned Additional District Judge has allowed the appeal on a ground which is altogether different from the grounds urged by the respondent in the appeal. The learned Additional District Judge states - according to the learned Counsel, erroneously - that since de jure title has not been transferred to the respondent, the respondent cannot be subjected to any tax in respect of an year for which no notice has been served upon him and that notices served upon the builder/promoter are of no avail against the respondent. But when it came to High Court, the view taken by the High Court is that even if transferor and transferee have failed to comply with the mandatory statutory requirement in Section 128 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplated by Section 126, it cannot be made liable for the tax and certainly not for the anterior period. 12. It is necessary to notice the relevant provisions of the Act for a proper appreciation of the questions arising herein. Among the taxes which the Corporation is empowered to levy by Section 113, property taxes is the first one. Sections 114 to 135 occur under the sub-heading property taxes . Section 114(1) states that save as otherwise provided in this Act, the property taxes shall be levied on lands and buildings in Delhi and shall consist of the following, namely.... Section 115 specifies the premises in respect of which property taxes are to be levied while Section 116 prescribes the basis upon which the rateable value of the lands and buildings has to be determined. Section 120(1) then says that the property taxes shall be primarily leviable as follows : (a) if the land or building is let, upon the lessor; (b) if the land or building is sub-let, upon the superior lessor; (c) if the land or building is unlet, upon the person in whom the right to let the same vests. Section 122 declares that on the failure to pay taxes by the person primarily liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of tax in respect of any period prior to the commencement of the year (in which the notice under Sub-section (2) is given). (2) Before making any amendment under Sub-section (1) the Commissioner shall give to any person affected by the amendment, notice of not less than one month that he proposes to make the amendment and consider any objections which may be made by such person. 13. Section 128 is equally relevant. Sub-section (1) of Section 128 provides that whenever the title of any person primarily liable for the payment of property taxes on any land or building is transferred, the person whose title is transferred and the person to whom the same is to be transferred shall within three months after the execution of the instrument of transfer or after its registration, if it is registered, or after the transfer is effected, if no instrument is executed, give notice of such transfer in writing to the Commissioner . Sub-section (4) is of crucial relevance and it reads : Every person who makes a transfer as aforesaid without giving such notice to the Commissioner shall, in addition to any penalty to which he may be subjected under the provisions of this Act, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transferor is bound to give notice of such transfer to the Commissioner. If the transfer is effected by the registered document, such notice has to be given within three months of the registration and if the transfer is effected under an instrument of transfer which in not registered, within three months of the execution of such instrument. Failure to give such notice renders the transferor liable not only to penalty but also to payment of all property taxes from time to time payable in respect of such or building until he gives such notice [Section 128(1) and (4)]. At the same time, Sub-section (4) of Section 128 expressly provides that the continued liability to pay the taxes cast upon the transferor (in addition to penalty) shall not affect the liability of the transferee for the payment of the said tax. Now, what do the words but nothing in this section shall be held to affect the liability of the transferee for the payment of the said tax in Sub-section (4) of Section 128 mean and signify ? In our opinion, the said words have to be understood in the light of the preceding provisions, viz., that the levy of the property tax is upon the lands and buildings, that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transferor does not give notice of transfer. Later, on April 1, 1990, the name of the transferee is inserted in the place of the name of the transferor by amending the assessment list. Can the transferee say in such a case that he is not liable to pay taxes for the period prior to April 1, 1990 ? If he can say so in law, would it not make Section 128(4) and Sections 119 and 123 (property taxes being levied upon the lands/buildings and their constituting a first charge on such lands/buildings) nugatory and meaningless ? So far as transferee is concerned, therefore, Section 126 does not in any manner cut down his liability or exonerate him from the liability resting upon him by virtue of other provisions in Chapter VIII. For the purposes of this case, it is not necessary to go into the scope and purport of Section 126. It is enough to clarify that whatever its scope and purport, it does not have the effect of relieving a transferee of a land/building from the liability to pay property taxes duly assessed upon such land/building and that this liability extends even for the period prior to the transfer in his favour and such taxes can be recovered from him according to law. 16. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a valid and sufficient service in law; the transferee cannot contend that since he has not been served with the relevant notice, the assessment made or any other action taken is bad in law. If he takes a transfer from a particular person, it is his duty to ensure that the transferor sends the intimation contemplated by Section 128(1) and his (transferee's) name is recorded as the owner in the place of the transferor. Unless the transferee's name is recorded as the owne r or as the person primarily liable, the Municipality cannot be found fault with for not sending relevant notices to the transferee. The substantive liability of the owner to pay taxes cannot be defeated by the non-intimation under Section 128 or by the failure of the transferee to have him name entered in the Municipal records. 18. It is again made clear that if a valid assessment was made any time prior to 1990, that assessment will continue to be valid and no notice or fresh order was necessary in the year 1990, unless the assessment was sought to be increased. Merely because a proceeding by way of affirmation of an existing levy was taken with notice to transferee by way of abundant caution, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Additional District Judge shall also take the above averment into consideration. 19. The Act does not contemplate a situation - it is necessary to emphasise nor should the courts create a situation by a process of interpretation, where both the transferor and transferee escape the tax which has been duly assessed. 20. The appeal is accordingly allowed. The orders of the High Court and the Learned Additional District Judge are set aside and the matter is remitted to the Learned Additional District Judge for disposal of the appeal according to law and in the light or the position of law explained hereinabove. Learned Additional District Judge shall be entitled to call upon both the parties to adduce necessary evidence to decide the questions arising herein, both factual and legal, according to law. Learned Additional District Judge shall dispose of the appeal within four months form the date of receipt of the copy of this Order. Both the parties shall present themselves before the Learned Additional District Judge on April 16, 1996 which is specified as the date of hearing in the appeal before the Learned Additional District Judge. It shall also be open to the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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